Thursday, October 15, 2015

With September inflation reported this morning, I can update one of my favorite series: real retail sales.

First of all, real retail sales rose to a new high:

The YoY% growth in real retail sales in comparison with real personal consumption expenditures are an excellent mid-cycle indicator, since reliably the former is both declining and negative the latter before recessions begin, and further the former starts to underperform the latter at about mid-cycle. Here's what they look like now:

There is increasing evidence that we are past mid-cycle.

Finally, let's look at real retail sales per capita. These typically peak one year or more before the onset of a recession:

Although population has not been updated past July, since it has been growing at about .06% a month, and since real retail sales are up about .30% in the last two months, we have made another peak. This is evidence that the economic expansion should continue at least through the 3rd quarter of 2016.

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